DL: I think our competitors are shy about talking about this, but value-added distributors have to make a profit. If you’re not profitable, you can’t be an extension to vendors or to resellers. We have to specify to vendors what margins we need to make in order to carry out value-added activities.
Are there particular technology siloes you’re seeing accelerate this year?
DL: In terms of CCTV and access control, there’s huge conversion going on transferring everything from analogue to IP... This is because things are moving into video analytics and people want better corporate governance. In security, everything is becoming more and more complex, and that brings opportunity. The social networking issue is a big example – should you ban everyone from Twitter and Facebook, or only give the marketing department access to these, and the boss? You need the next-generation firewall that provides this functionality and controls security at an application level. There’s also granular reporting and Security Information Event Management [SIEM], which will be an explosive area of growth.
When it comes to networking, wireless and 802.11n are big things. I think this will continue to evolve. The constraint now with the last mile being so fast, is how you keep up with the backhaul. That’s another focus for us. The days are gone where we use wireless for just data – we are using it for voice, for video applications. We will be very interested to see what happens when the National Broadband Network (NBN) takes off, and what shape it will take. The area we have some challenges in is storage. It’s a hugely commoditised market and it seems it’s either EMC or NetApp. But we certainly see opportunity in iSCSI and fibre channel over Ethernet. We hope some disruptive technology will come in to unlock the monopoly.
Do you see NBN as a good opportunity for the ICT channel?
DL: NBN is something everyone should take seriously because there is huge opportunity. NBN will give everyone Internet access, so the difference will be in services and the value you bring to the table. But again, if you don’t identify, innovate and focus, you will be lost. We are one of lots of companies getting ready for this. We are working on greenfield projects at the moment, and while it’s not mandated yet, all will soon have to deliver fibre-to-the-home. A lot will be wired, but 10 per cent will be wireless and at $4.3 billion, that’s a huge opportunity. Anecdotally, my only concern is that by the time they roll it out, will that technology still be relevant, given the way all technologies mature?
What are the biggest challenges now facing distributors?
DL: Everybody has their own unique problems, but businesses should continue to invest, which is what we’re trying to do. We have updated our website, and we need to further invest in systems. But people are the most important thing. We also need to invest in the channel, which is a very difficult thing. You can’t control channel, you need to manage them, so investing in channel, listening to what they want and managing that are the three challenges we face. Ways we are investing include Local Government events, and we have gotten on the local councils panel contract so our technologies are specified, then we bring our resellers in to do the integration and fulfilment. I keep telling my 45 staff that we need to keep being that trusted partner.
Has your partner mix changed in light of your evolving product line-up and broader ISP convergence?
DL: Definitely. In SMB business, it’s usually very general, and we’re seeing less and less of that. We are seeing more of our partners playing in the enterprise space. In the ISP side, we categorise it into two areas: One side doing managed services, and the other tier-two telcos providing the tail. There are very successful companies like ManageNet, Brennan IT and Earthwave providing different managed services to customers in security, which is a very mature offering now. In Australia, we have a lot of Internet traffic that has to go through a service provider, so they’re in a good position to intercept and ensure the right data is coming through. Managed storage hasn’t grown however, because the cost of transferring traffic is still very expensive. Hopefully NBN will solve that. And as managed services and cloud evolves, that will change again. So managed services is a very important segment of our reseller base that’s evolving and we have a lot more working with us.
We are also big in the tier-two telcos like iiNet, Primus and TPG, but they’re more interested in providing the tail and let the resellers or others do what they want to do on top. But they are also evolving because they know that with the NBN coming, it will level the playing field and it will be the services they provide that will differentiate them. There’s a lot of consolidation too because they need to get to a certain size for economies of scale. What we’re seeing now is the convergence of the managed services provider and the tier-two telco. One looks at services as a must-have; the other as a necessary evil. I think service providers will be the biggest area of growth for us. If there’s ever going to be a defining moment for Australia, it’s going to be over the next five years. The Government is saying we have to have the next-generation broadband network. It’s going to be a very interesting time not just in IT, but also the way we work and communicate.